Work incentives and 'in-work' benefit reforms: A review

In-work benefit reforms seek to reduce poverty and promote employment among low-income families. Using evidence from similar policies in the USA and C anada, this paper reviews the likely impact of recent UK reforms. The focus is on employment and hours. In particular, the paper examines the effectiv eness of the new Working Families Tax Credit in the UK in increasing employ ment among low-income families. It presents evidence suggesting modest incr eases in employment for single parents and workerless married couples with children, but with some offsetting reductions in employment in two-earner c ouples with young children.